Partial Plan Termination

What Does Partial Plan Termination Mean?

A partial plan termination occurs when an employer that provides employee benefits experiences a sudden decrease in their workforce, resulting in a large part of the plan being terminated.

Insuranceopedia Explains Partial Plan Termination

Partial plan terminations are commonly defined as a 20 percent or greater reduction in the number of employees in a short period of time.

There is, however, little clarity about how this applies to small businesses. A company with only five employees, for instance, will lose 20% of it workforce if one employee quits or is downsized. Yet it would seem excessive if this resulted in a partial plan termination.